I own minerals in section 36 township 16N range 8W of Kingfisher County OK. Newfield has already paid for surface damages to set up a new horizontal well location on the SW/4. To my knowledge, the section is held by an old lease, there is a vertical well on the SE/4 that still produces a tiny amount that is produced by CRB. Recently a third party reached out to offer a lease with a modest signing bonus, and 3/16 royalty. The plan as I understand it, is for this third party to somehow purchase the old vertical well, and plug it to then be able to terminate the old existing lease.
I admit I don't understand what is going on with this. Is it believable that Newfield would actually spend the time & money to begin setting up a horizontal location without having secured the rights to drill & produce a well? This seems unlikely to me. Does anyone have experience with something like this? Can anyone shed some light on what might be happening with this?
Will
Will,
Who is the third party? They could be a Newfield operative.
Tom:
I do not know if it is a company, or an individual, but the third party I have spoken to is Tyler Morey. Tyler says he knows the CRB owner.
Will
If a third party purchased an interest in the old lease, the last thing they would normally want to do is to plug the well and terminate the old existing lease, Why would they, since they would own part of the leasehold, and then the owners would have to turn around and pay bonus money and attempt secure all the leases again at more unfavorable terms to them....
These things are more complicated than this though. Newfield already owns an interest in the well, as assigned from Gastar, which was in turn assigned from Chesapeake, and on and on it goes. There is an operator, and there are multiple working interest owners.
William,
This is happening a lot more in these areas. You actually have all the power here and don't need anyone to "help" you plug the well. The well needs to be plugged regardless. The old base lease that holds the unit has expired on its on merits and the unplugged well is clouding your title and keeping you from getting the high dollar bonus that comes when you can lease your minerals. I've received letters out here from the same guy and my sister got a call from him. He works for Haggard Land Company. With oil prices in the dump I bet they are pretty slow over there and are now trying their luck at buying cheap leases and selling them for more than they paid the next day. Don't give your money to a middle man, keep it all to your self.
A few attorney firms are doing the same thing out here. They will tell you they can get way more than you can, not true, out in this area it really is "ask and you shall receive." Those attorneys ask for a % of the bonus to break the old lease. Don't fall for that either. There are tons of qualified oil and gas attorneys out there that will take the case and win just as easily on an hourly basis. Trust me, if you own a good sized tract of minerals you could be giving away a few hundred thousand without knowing it.
JW:
Thank you for your reply, I'll blend all this wisdom together, and hopefully come up with a good plan.
Will
Steve:
How do I get the old vertical well plugged? Have you done this before?
Will
I also have interest in that section. And I do think I remember getting something about Gastar and Newfield. So where does that leave us as far as being able to close the old well and negotiate a new lease. The old lease is a terrible one for us.
When you say the old lease has expired on its own merits how do you know if that is the case? I thought as long as it was producing even a modest amount the lease would still hold.
You would need to secure the services of an attorney, and a few thousand dollars because a lawsuit will likely be needed. They won't plug the well just because somebody asks them to. Several owners can go in together.
You will have to prove that the well is not economic to operate, and that they are operating at a loss just to keep the lease active.
If this is a gas well, and there is no pump jack on the well, their expenses may be minimal.
William,
Yes, I have done this a few times. In the discovery phase you will be able to see the exact sales with the expenses and be able to see if it is economical to keep the well going.
Steve:
It turns out there is another old well on this section on the NE/4 that has not produced for over a decade, and it may actually be the one the person from Haggard Land Company is trying to plug. I thought they were talking about the one on the SE/4. We have been using a tank battery from the old NE/4 well for over a decade as a grain bin. Apparently it was never plugged though. It seems Newfield already has acquired the rights to the old well on the SE/4, the one I was aware of, so now I'm more confused than ever, because I don't see how Newfield can produce a new horizontal well that they plan to drill on the SW/4, if there is still an unplugged well on the NE/4. Do you have any thoughts on this?
Will
The well the in the SW/4 (the Sooner #1-36) has a 640 acre spacing (order 256313) and holds the entire section. It seems to produce from the Hunton. If that is the case, the well in the NE/4 is not relevant. I would engage Haggard Land with this information, and see what they say.
JW:
What is the best way to check production volumes? When I look on the OCC website I can't find any production volumes. I can get to the screen that shows production rates, but my searches come back 0 for all years, so I know I am doing something wrong.
Will